The EU’s repeal of antidumping duties on imports of US ethanol in mid-May could pave the way for increased shipments to Europe of the biofuel. European ethanol producers have raised concerns over the environmental impact of increased imports, but deeper questions over the sustainability of biofuels remain unanswered.

The European ethanol association, ePURE, voiced concerns over the harmful impact of the decision on European ethanol producers, especially as other destinations for US ethanol exports – including Brazil, China, Peru and Colombia – either have measures in place against US imports, or are considering them.

Some in the market suggested additional shipments to Europe from the US would be limited in any case. Although the removal of the Eur62.30/mt tariff is a significant cost reduction, the economics to ship ethanol on the route have been marginal. In addition, Europe’s requirements for sustainability certification and a minimum of 50% greenhouse gas savings limit the amount of US product that is eligible for use in the EU.

Weaker forward prices in the European ethanol market, combined with logistical constraints, could also be major hurdles to further imports.

Growing share of transport fuel

Biofuels are seen as part of a transition to a low-carbon energy future, alongside other “clean” fuels, such as LNG and electricity. Both of these other solutions have their own issues. Gas produces some emissions when combusted, and is energy intensive in its extraction, cooling and shipping. And, at least for now, electric cars through their construction supply chains and power generation sources, are not the clean solution they one day could be.

Biofuels are a small but significant part of the European road fuel mix, displacing around 5% of gasoline and diesel demand, which together account for around 95% of road transport fuel on the continent, ePURE says.

Diesel demand in Europe, including biodiesel, was 5.15 million b/d in 2018, slightly up from 5.14 million b/d in 2017, while total gasoline and ethanol demand was 2.00 million b/d, up from 1.91 million b/d, S&P Global Platts Analytics data show.

The EU in 2009 took the decision to mandate a minimum 10% share for renewable energy in transport by 2020, with member states forecasting that 8% would be met through “conventional” biofuels. This was revised in 2015 to set a 7% ceiling to the contribution from conventional biofuels.

EU countries adopt biofuel blending quotas in different ways. E5 gasoline, with a 5% ethanol content, is common in much of Europe, though E10 is gaining ground in several countries. Some countries mandate the same biofuel blending level across both gasoline and diesel, while others apply different percentages.